Pakistanis caught in middle as gas price row festers

A cyclist rides past a line of vehicles on Monday as they wait to buy compressed natural gas from a government-run station in Islamabad, Pakistan.

Photo: AFP

Huge bottlenecks of cars snaking away from filling stations have become a familiar sight in Pakistan as a row festers between retailers and the authorities over the price of compressed natural gas (CNG).

CNG is substantially cheaper than gasoline in Pakistan and is widely used by private motorists, taxis, rickshaws and buses.

However, many CNG stations have closed their doors, declaring they are no longer making money following a Pakistani Supreme Court hearing at the end of October that led to pump prices tumbling by one-third.

As prices climbed to about 92 rupees (US$0.95) per kilogram, Pakistan’s highest court questioned the linking of CNG to international oil prices and how much retailers were charging at the pumps.

The court queried whether there was a need for the price of CNG — produced locally — to be pegged to gasoline prices, which reflect constantly fluctuating worldwide oil markets.

As a result, the Pakistani Oil and Gas Regulatory Authority (OGRA) cut the pump price to about 61 rupees per kilo — good news for motorists, but disastrous for the CNG station owners.

They say they are no longer making a profit and for the past two weeks many filling stations across Punjab, the country’s most populous province, have only opened for three days a week.

It is a row that observers say exemplifies Pakistan’s lack of long-term planning — particularly on energy issues — but also the willingness of special interest groups such as CNG retailers to exploit public misery for their own gain.

“It’s typical of the way Pakistani administration works — they never have a long-term view. They have an immediate issue to deal with and they don’t see the problem in the longer perspective,” political analyst Hasan Askari told reporters.

Pakistan has substantial natural gas reserves and in the past, the government encouraged motorists to convert their cars to run on CNG in order to reduce dependency on imported oil.

However, security worries in gas-rich areas and years of underinvestment in exploration mean demand has far outstripped supply and the country now suffers gas shortages every winter.

Factories and homes suffer “load-shedding” — having their supply cut off — infuriating ordinary people who cannot cook or heat their homes and damaging the economy by halting industrial operations.

Askari said that the CNG station owners were seeking to stir up public anger with their strike to force Islamabad’s hand.

Yet the president of the CNG station owners’ association, Ghayas Paracha, said his sector was being treated unfairly and demanded the government level the price playing field.

“One solution is ... every sector giving the same price for the gas,” he said. “There is a big discrimination for us. We pay for instance 300 rupees per MMBtu [1 million British thermal units — a standard unit of energy used to calculate gas prices] of taxes, but the industry sector is paying only 50 rupees per MMBtu.”

Paracha said about 3.7 million cars in Pakistan run on CNG and the filling station shutdown has meant huge lines at the few that remain open.

Farooq Qadri, a taxi driver in Rawalpindi, told reporters the CNG “strike” had forced him to leave his car at home for most of last week, severely denting his income.

“I lost 80 percent of my business — it’s as if I hadn’t worked at all. How am I meant to feed my family?” the father of two said.